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6 Extra Costs to Consider When Leasing Commercial Space

Category Commercial Property

If you are considering commercial office space for your business there are some important decisions to make such as location, price, parking etc.  

Once you have found an ideal spot that seems to check all the boxes, you should then be analysing all costs associated with your new commercial property lease.
Here are a few to help you out:

Cost per m2:

Probably the main cost that is initially considered as it is the biggest cost being the monthly rental.
Importantly though, it must be pointed out that all advertised prices per square metre exclude VAT which can make a big difference if you are not calculating this in monthly.

Escalation Rate:

The Escalation Rate is present in all lease agreements and although not a fixed amount it can be anything between 7-10% annually and refers to the percentage amount by which your rental will increase annually.

Lease fees:

Lease or contract fees in the commercial space are significantly higher than residential property and will need to be paid along with deposit and first months rental.

Electricity:

Electricity is in most cases excluded from the quoted rate per square metre and with rising electricity costs, this needs to be an expense to be factored into your budget.
Also find out if the commercial office you are planning on letting is directly metered or if its 'shared' based on an electricity metering for your whole floor with your reading making up a percentage of said floor according to the amount of square metres you take up.

Water and  Refuse:

Consumption of Municipal services such as water, refuse and sewerage is often passed on to the tenant.  Budget approximately R3.50/m2 excl VAT for this.

Aircons:

Get confirmation from your landlord or broker as to what the aircon requirements and costs are.
Some landlords charge a monthly or yearly maintenance fee per aircon which then covers the servicing/replacement etc while others do not charge a fee but then will expect you to do an annual or bi-annual service of each aircon unit.

Author: Cesar Alexandre

Submitted 06 Jun 19 / Views 463